Correlation Between Sun Peak and Alaska Energy

Can any of the company-specific risk be diversified away by investing in both Sun Peak and Alaska Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sun Peak and Alaska Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Peak Metals and Alaska Energy Metals, you can compare the effects of market volatilities on Sun Peak and Alaska Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sun Peak with a short position of Alaska Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Peak and Alaska Energy.

Diversification Opportunities for Sun Peak and Alaska Energy

0.57

Correlation Coefficient

Sun Peak  Alaska Energy

Very weak diversification

The 3 months correlation between Sun and Alaska is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sun Peak Metals and Alaska Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Energy Metals and Sun Peak is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sun Peak Metals are associated (or correlated) with Alaska Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Energy Metals has no effect on the direction of Sun Peak i.e., Sun Peak and Alaska Energy go up and down completely randomly.

Pair Corralation between Sun Peak and Alaska Energy

Assuming the 90 days trading horizon Sun Peak Metals is expected to under-perform the Alaska Energy. But the stock apears to be less risky and, when comparing its historical volatility, Sun Peak Metals is 1.49 times less risky than Alaska Energy. The stock trades about -0.25 of its potential returns per unit of risk. The Alaska Energy Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Alaska Energy Metals on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Alaska Energy Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sun Peak Metals  vs.  Alaska Energy Metals

Sun Peak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Alaska Energy Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alaska Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Sun Peak and Alaska Energy

The main advantage of trading using opposite Sun Peak and Alaska Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Peak position performs unexpectedly, Alaska Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alaska Energy will offset losses from the drop in Alaska Energy's long position.

The idea behind Sun Peak Metals and Alaska Energy Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.